June 11, 2025  – Accountable Care Organizations (ACOs) participating in the Medicare Shared Savings Program (MSSP) helped reduce federal healthcare costs by an estimated $4.1 billion to $8.1 billion between 2012 and 2019, according to a new analysis published in JAMA.

The study, which examined over 8 million Medicare fee-for-service beneficiaries, found that the establishment of ACOs was associated with measurable decreases in per-beneficiary spending over time. Specifically, beneficiaries attributed to an ACO saw an average reduction of $142 (or 1.2%) in annual spending after three years. By year six, the annual reduction grew to $294 (or 2.4%) per person.

Researchers noted that the most significant savings came from physician-led and smaller ACOs, particularly those managing fewer than 10,000 beneficiaries. These organizations consistently outperformed larger or hospital-affiliated ACOs in cutting costs while maintaining patient care.

Using administrative claims data, the research followed 2.7 million beneficiaries enrolled in ACOs and compared them to 5.5 million non-ACO beneficiaries across 42 million patient-years. The data revealed that before ACOs were formally established in 2012, both groups had relatively similar healthcare costs. Specifically, in 2010 and 2011, annual per-beneficiary spending was $12,147 for future ACO enrollees and $12,318 for those not later attributed to ACOs.

However, after ACO implementation, the trend diverged. By year three, per-beneficiary spending among ACO enrollees had dropped by $234. By the sixth year, the cumulative reduction reached $584 per individual, signaling a growing benefit over time.

These findings add to the ongoing evaluation of the Medicare Shared Savings Program, which has aimed to shift healthcare delivery from volume-based to value-based models. The program incentivizes providers to improve care coordination and efficiency, allowing them to share in any cost savings they generate.

The JAMA report emphasizes the financial potential of sustained ACO participation. It also supports the idea that smaller, community-based provider groups—especially physician practices—can drive significant changes in spending patterns without compromising patient outcomes. As policymakers consider expanding value-based initiatives, these long-term findings may shape future investment and design strategies for Medicare’s cost containment goals.